efore we proceed, it’s important to note that what I’m about to discuss with you is not a ‘perfect science’, but it’s an occurrence in the market that is critical to understand, and a tool to have at your disposal when you’re analyzing charts.

The first point you need to understand is: A market will often ‘remember’ and respect where a major move started. That is to say, if a market retraces back to the level or area a major move started from, many times (not every time) it will again bounce or fall away from that same level / area. As a price action trader, this is a HUGE clue for us and we can use it to develop several high-probability entry techniques:

In the example chart below, we can see a few important things taking place.

1) A key resistance level was established near 9735.00 – 9700.00 in the DAX30 market (German Stock Index). This key resistance level and the big move lower from it established an ‘event area’.

2) The first major test of this key level / event area a little over a month later, resulted in a bearish pin bar sell signal that led to another large decline.

An event-area is something I teach more in-depth in my course and members area. For our purposes here today, you should know that an event area is a level or a small area / zone on the chart where a big price move started from. A price action signal by itself can start an event area, it doesn’t have to be at an existing support or resistance level. However, if a big move starts from a price action signal in conjunction with a key level of support or resistance, this is an even stronger event area.